There is a fierce competition between jurisdictions to attract entrepreneurs, compelling the legislators to adapt to the continuously evolving demands of businesses to obtain simple and convenient legal solutions for conducting their activities. In response to the major shift from physical to remote business and employment structures in the past decade, many countries have digitalized the formalities connected to incorporating and operating legal entities.
For example, the e-Residency project implemented in Estonia allowed foreign individuals to establish and run a company online, conduct banking online, manage documentation online, declare taxes online, etc., without physically visiting Estonia at any time. The e-Residency project of Estonia proved to be so successful that other countries around the world, including Lithuania, Ukraine, and Portugal, introduced similar systems to their jurisdictions.
To keep up with the trend, the Emirate of Dubai recently introduced the Virtual Company License to interest non-resident freelancers and businesspeople worldwide in incorporating in the Emirate of Dubai. The Virtual Company License is a step towards the goal of building a “Virtual Commercial City” in Dubai, a “hub for trade, innovation, and e-commerce”, “designed to make Dubai the first global city for trade in digital commerce”.
Benefits of the Virtual Company License
The Virtual Company License is a combined initiative of a number of Dubai authorities, which allows non-resident persons to establish and run a legal entity in Dubai without residing there.
Apart from the obvious ease of accessing the new Dubai market, obtaining the Virtual Company license also lets you enjoy low costs and reduced administrative burdens when establishing and running the company. The license achieves this by giving holders online access to all the tools they need to operate the company, including the ability to manage and digitally sign documents
One of the most notable benefits of obtaining the Virtual Company License is gaining access to significant business opportunities by allowing you to offer goods and services on DubaiStore.com – a major regional online trading platform run by a joint venture between two government authorities.
Obtaining the Virtual Company License
To obtain a Virtual Company License, an individual must:
- Not be a UAE resident;
- Reside in one of 101 approved countries worldwide (including Georgia);
- Conduct one of the location-independent approved activities in the following sectors:
- Computer programming, consultancy and related activities;
- Design activities;
- Service activities related to printing and advertising.
The license does not guarantee physical access to the UAE or opening a business bank account (which remains at the discretion of the banks), but the latter process is facilitated for Virtual Companies.
The procedure of obtaining the Virtual License shall be very simple, quick, and hassle-free if all application documents are duly presented.
Taxation of Virtual Companies
Virtual Companies remain subject to any applicable taxes depending on the location of economic activities and international tax agreements. There are no taxes applicable to Virtual Companies in Dubai apart from the VAT in the amount of only 5%, and only the entities that exceed USD 100,000 in total revenue within the UAE are required to register as VAT payers.
Fees for obtaining the Virtual Company License
The fees for gathering all necessary documentation for registration amount to AED 300 (equivalent of USD 91 at the time of writing).
The fee for the Virtual Company ranges from AED 850 (equivalent of USD 260 at the time of writing) for one year or up to AED 2,161 (equivalent of USD 654 at the time of writing) for a three-year license.
Overall, the Virtual Company License is a crucial early step on the way to establishing the Dubai Virtual Commercial City. While limited in the number of permitted activities and countries, the Virtual Company License is a highly flexible tool for businesspersons, entrepreneurs and freelancers to enter the Dubai market, manage and run the business remotely, and, notably, offer their goods and services to potential customers on DubaiStore.com. Allowing entities that conduct location-independent activities to incorporate and operate in Dubai completely remotely is a unique approach to the issue, which once again reinforces the status of Dubai as a leading jurisdiction for digital businesses both in the region and in the world.